Newsletter – September 7 2017

“Does the current energy debate worry you in regards to economic growth, because one thing we continue to hear here, when we spoke to chief executives during the course of the earnings period.

Over the past month, so many of those with big industrial concerns have said they’re very worried about the fact that their energy bills have doubled or tripled in some cases, and they’re looking overseas at options…”(Listen to the full interview here)

The week that was…

Lots happening this week. Energy has again dominated conversation.

This time…something we have covered very extensively on Money News – the closure of the coal-fired Liddell Power Station in the Hunter Valley.

During Question Time on Tuesday, Prime Minister Malcolm Turnbull announced that the government are in talks with the Liddlle owners – AGL – to keep the power station open an extra five years.

He warned of the Australian Energy Market Operator’s warning that Australia faces rising prices and more blackouts if the states don’t get their act together.

Considering AEMO put out a warning this week of more short-term problems for energy networks in South Australia and Victoria, as generation capacity is put to the test, this is something that needs to be sorted now. We are only months away from summer and need a solution.

The report also warned of increased vulnerability to climatic events, a tight supply-demand network, and the possibility of load-shedding in coming months – things we cannot have if we want a secure energy network, not a third-world country.

The report says that without targeted actions, the risk of load-shedding in South Australia is between 26 and 33 per cent, and in Victoria it is 39 to 43 per cent.

Of course, the PM jumped on this opportunity to basically give it to Labor saying “We’ve seen today another report highlighting the failure of Labor’s experiments with energy,”

“What is shows is a sorry tale of Labor’s mismanagement, particularly in South Australia and Victoria.

“And it’s left our national electricity market vulnerable.”

And I can’t say I don’t agree with him.

The Hazelwood Power Station closed in April, leaving the energy market already with an uncertain future.

Now what happens if the third-largest energy producer in Australia closes in five years time?

Liddell is Australia’s oldest coal-fired power station, coming up to its 50 year mark after being commissioned in the early 1970’s.

Not only is it the oldest, but as I’ve also said, it’s also the third-biggest coal-fired power station in Australia with a capacity of 2,000 megawatts.

So this is a big hit to the energy market when this closes.

Now, AGL has said in the past – in fact, as recent as August 10 this year – that the Liddell Power Station will close in 2022 as it cannot run reliably.

In fact, AGL boss Andy Vesey told me exactly “Let me tell you what I do agree with the Treasurer on, and that is existing assets – we have to get as much value out of them as possible. He uses the word ‘sweating’; we use the word ‘running them optimally’.

That’s right…but when you’re talking about a plant like Liddell that’s at the end of its life, you can never have it running reliably and securely in its current way.

The amount of money you would have to invest, to bring that plant into continued operation at the end of its life…

That money would be better spent on new-generation technology that is cleaner, more efficient, more flexible, that will serve Australians for decades to come, not years to come”(Listen to the full interview here)

So it most definitely was a surprise when the PM said there was a chance Liddell might be kept open. But of course that didn’t last very long.

Andy Vesey took to Twitter to debunk the ideas saying “We’re getting out of coal. We committed to the closure of the Liddell power station in 2022, the end of its operating life.

This is why energy has dominated a lot of conversation this week. There seems to be confusion surrounding the future of Liddell.

Government says they want to keep it open, AGL says it needs to close.

But what if someone was to come in and purchase Liddell from AGL and keep it open?

This is what we are speculating.

Treasurer Scott Morrison even told me on Money News that he was in the room – alongside Prime Minister Malcolm Turnbull, Energy Minister Josh Frydenberg, and Deputy Minister Barnaby Joyce – when Andy Vesey said he would sell Liddell to a responsible buyer!

This is in stark contrast to the tweets that Andy Vesey is putting out saying that Liddell is at the end of its life and keeping it open – either under AGL or a new owner – it’s irresponsible to keep it open.

So what on earth is happening here? It’s a giant she said, he said.

It doesn’t matter if someone buys it or not, but Australia’s electricity market is facing a tough summer and if there is more state-wide blackouts, the dual-citizenship saga will be the least of the Governments issues.

About The Author

Ross Greenwood is the Nine Network’s business and finance editor, and hosts Sydney's top-rating radio program, Money News, for 2GB, 4BC. 3AW and all networked stations across the Macquarie Media group.
He appears daily on the Today Show - notably for his Money Minute - and Nine News.